Value Creating With “Blue-Line” KPI Management

Organizations of all types rely extensively on key performance indicators (KPIs) to define and evaluate success. KPIs are best used as instruments for organizational learning by identifying knowledge gaps that allow the company and its people to cope more effectively with a constantly changing competitive and technological landscape. A practice that is recently being disputed is “red line management,” where managers are driven to pursue inappropriate targets because they are tangible and they are incentivized on KPIs that while they are connected to value, do not drive it. A new concept that is being introduced to the finance world is “blue-line management,” an approach in which all decisions of consequence are made with one aim in mind: to create value for the organization. This approach stands in stark contrast to the more common practice of “red-line management”